On personal finance.

More taking chances with Web gambling

December 01, 2002|By Kathy Kristof, Tribune Media Services.

In the quiet of their homes, gamblers are clicking their way ever deeper into debt.

Internet-based gambling--highly controversial, the subject of pending legislation and illegal in many states--is soaring, said Sebastian Sinclair, president of Christiansen Capital Advisors, a New York-based company that keeps gambling industry statistics.

Bets placed over the Internet are expected to total about $4 billion this year. That's about one-third more than last year, and the total is expected to quadruple over the next four years, Sinclair said.

Although all types of gambling are relatively controversial, Internet gambling is more so for two main reasons. First, it's illegal in many states. The only places consumers can gamble legally are licensed casinos and sports-betting operations that have been approved by the appropriate state government. Internet sites don't qualify in most states, but operators get around the rules by establishing their businesses offshore.

Still, consumers who use the sites in states where gambling is illegal are violating the law.

In addition, some experts say Internet games encourage compulsive gambling, an addictive behavior that can savage family finances.

"The substance that people with gambling problems abuse is money," said Keith Whyte, executive director of the National Counsel on Problem Gambling in Washington, D.C. "Where a cocaine addict might be able to go through $1,000 in drugs in a night, for a gambler that's just one hand of blackjack."

Internet gamblers often use credit cards to place their bets. Not only can that greatly increase the amount of money immediately available for gambling, but losses racked up on losing bets come back to haunt the gambler at the end of the month--and with an interest rate attached that can run 20 percent or higher.

Heather M., a Palm Springs, Calif., writer who asked to remain anonymous, lost $40,000 over a five-year period playing video poker on her home computer.

"I won $4,000 one night when my husband was watching a television special on Internet gambling," she said. "I said, `Right, honey. Isn't that awful? Come and look at this.' But it was the beginning of a nightmare. I was completely out of control."

Of course, problem gamblers are not the sole purview of the Internet. Giman Gandapermana says his family's finances were ruined by gambling, but it was an Indian casino that opened near his home in Yucaipa, Calif., that proved his family's undoing.

Gandapermana said he's still struggling to pay off $50,000 in credit card debts for gambling losses that were largely run up by a family member.

Thanks to the vast expansion of Indian gaming establishments, California recently surpassed New Jersey in gambling revenue, with about $6 billion in annual receipts. The Golden State's legal gambling revenue now ranks second only to Nevada, which boasts gambling receipts of $9.3 billion a year.

"You borrow money and say, `I'll pay it back when I win,'" said Gandapermana, a clinical scientist. "But you still have to pay the bills."

The average problem gambler has 14 to 16 credit cards and owes friends and family members thousands of dollars, Whyte said.

"For the problem gambler, the only time you have to admit that you've lost is when you are out of the game," he said. "As long as you can keep gambling, as long as you can beg, borrow or steal enough to keep going, you can tell yourself that you're one bet away from winning it all back."

Although all types of gambling can create debts, Internet gambling may cause people to fall further, faster, because it allows gamblers to feed their addiction quickly, privately and at any time of the day or night.

"There is no lag time between the urge to gamble and the ability to scratch that itch," said Tom Tucker, executive director of the California Council on Problem Gambling.

"With traditional gambling, you have to decide to get up and get dressed and go to the ATM and then to the casino," Tucker said. "With Internet gambling, you can sit there in your shorts and use your credit card to clean out your family bank account."

Indeed, Heather M. was usually dressed in her pajamas while gambling on-line.

Both business and government have taken steps to curb Internet gambling. The House of Representatives this year passed an Internet gambling measure that would have barred banks from funding Internet bets. The measure failed to win Senate approval.